SINGAPORE (Feb 12): Construction group OKP Holdings saw its 4Q earnings decline fourfold to $2 million from $8 million a year ago on lower revenue.

Revenue for the quarter fell 24.1% to $26.1 million from $34.4 million in 4Q17, largely due to lower contributions from the construction segment due to a lower percentage of revenue recognised from a few construction projects which were reaching completion.

This was coupled with the absence of revenue from a construction project at the PIE exit to Tampines Expressway during 4Q17.

Meanwhile, cost of works fell 11.1% to $21.1 million from $23.7 million previously due to lower sub-contracting costs, as well as lower cost of construction materials due to lower utilisation along with a decrease in labour costs.

Gross profit margin fell to 19.5% from 31.3% in 4Q16, due to lower profit margins for new and some current projects as a result of a more competitive pricing environment and rising manpower costs.

A $0.1 million loss in share of results of associated companies and JVs was also registered over 4Q compared to the group’s $2.5 million gain in the same period a year ago, which was mainly due to a lower share of profits from Lakehomes, the developer for the LakeLife Executive Condominium.

The latest set of quarterly results brings OKP’s earnings for FY17 to $12.7 million, down 11.3% from $14.3 million in FY16.

While revenue for the full year grew 5.6% to $117.3 million from $111.1 million in FY16, cost of works grew 7.2% on-year to $95.6 million from $89.2 million on the back of sub-contracting costs, higher labour costs due to salary adjustments, and higher overheads, among others.

The group has declared a final dividend of 0.7 cent, as well as a special dividend of 1.3 cents.

OKP says it remains cautiously optimistic on the group’s outlook as it continues to be supported by a pipeline of projects extending till 2021.

Looking ahead, the group says it will continue to strengthen its core civil engineering business and deliver existing projects, while also seeking suitable opportunities to broaden its foothold in the property sector, both locally and abroad, through strategic tie-ups with experienced partners.

This story, written by Michelle Zhu for The Edge Singapore, first appeared on Feb 12.